NationsBank's 1st-quarter profit rises sharply

April 20, 1993|By David Conn | David Conn,Staff Writer

Generally meeting Wall Street's expectations, NationsBank Corp. of Charlotte, N.C., reported sharply higher first-quarter earnings yesterday.

The results were clouded, however, by significant one-time events that did not reflect the company's core operations. The current period included a large gain from an accounting change, while the year-ago quarter included an equally large gain from the sale of securities.

For the three months ended March 31, the company said it earned $481 million, or $1.89 a share, compared with $310 million, or $1.28 a share.

But $200 million, or 79 cents a share, of those 1993 first-quarter earnings came from a one-time accounting change that many companies have reported in recent quarters. The company also paid sharply higher taxes in the recent quarter, partly a reflection of the end of tax benefits it enjoyed from its federally assisted purchase of a Texas bank in 1988.

Before the accounting change and after taxes, NationsBank's earnings fell to $1.10 a share from $1.28 a year ago.

The latest quarterly report also suffered in comparison with a year ago because of the sharp drop in securities gains. A year ago, the company earned $204 million from the sale of securities, which dropped to $12 million in the latest period.

NationsBank focused on this difference, pointing out that pretax earnings before accounting changes and securities gains rose 133 percent, to $414 million, from $178 million a year ago.

"We are pleased that the operating momentum our company generated in 1992 has carried forward into the first quarter," Chairman and Chief Executive Hugh McColl said in a statement.

He also noted that loans were up during the quarter, and nonperforming assets fell 29 percent from a year ago. NationsBank set aside $120 million to cover future credit losses, down from $265 million in the 1992 first quarter.

Still, not counting the extraordinary accounting change, both return on assets and return on equity, two important measures of profitability, fell from a year ago.

The company's stock fell $1 a share yesterday, to close at $54.75, in trading on the New York Stock Exchange. Investor relations chief Rusty Paige and several analysts pointed out that investors appeared to be taking profits in bank stocks.

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